EPA Issues Flexible Standards For Cooling Water Intake Structures At Existing Manufacturing Facilities And Power Plants

On May 19, 2014, the U.S. Environmental Protection Agency ("EPA") released a final rule with Clean Water Act ("CWA") standards for cooling water intake structures ("CWIS") at existing manufacturing facilities and power plants. The final standards are more flexible than those proposed by EPA for existing facilities in April 2011. Still, many facilities will face significant compliance costs and more burdensome application requirements when renewing their wastewater discharge permits under the National Pollution Discharge Elimination System ("NPDES"). Companies should begin planning for compliance well in advance of their NPDES permit renewals to allow sufficient time for data collection, the preparation of studies to demonstrate compliance, and any necessary changes to CWIS technologies or operational practices at their facilities.

Rulemaking History

Section 316(b) of the CWA requires that "the location, design, construction, and capacity of [CWIS] reflect the best technology available for minimizing adverse environmental impact." The CWA does not define the "best technology available" ("BTA"), but the Supreme Court has shed light on that phrase in response to EPA's past rulemakings under CWA § 316(b). In the past ten years, EPA has issued three phases of CWIS rules, all of which have been the subject of extensive litigation:

Phase I Rule for New Facilities. In 2001, EPA published a Phase I rule for any type of new facility (except oil and gas exploration) that has a CWIS with a design intake flow greater than two million gallons per day ("gpd") and that uses at least 25 percent of the water withdrawn for cooling purposes.1 Under the Phase I Rule, a "new facility" is a greenfield or stand-alone facility that commenced construction after January 17, 2002. The U.S. Court of Appeals for the Second Circuit upheld the bulk of the Phase I rule but rejected certain provisions allowing new facilities to meet the Phase I requirements through restoration measures.2

Phase II Rule for Existing Power Plants. In 2004, EPA published the Phase II rule for existing power plants with CWIS of design intake flows greater than or equal to 50 million gpd.3 The Second Circuit remanded numerous aspects of the Phase II rule to EPA, including the Agency's decision to reject closed-cycle cooling as BTA based on a comparison of costs and benefits.4 In 2009, the U.S. Supreme Court upheld EPA's authority to consider costs and benefits when determining BTA, but the Court left it to EPA's discretion to decide exactly how to do so.5 The Supreme Court remanded the Phase II rule to the Second Circuit, and EPA subsequently asked the Second Circuit to return the rule to EPA for further review.

Phase III Rule for New Oil & Gas Facilities. In 2006, EPA published the Phase III rule with requirements for CWIS at certain offshore oil and gas extraction facilities that commenced construction after July 17, 2006.6 In July 2010, the U.S. Court of Appeals for the Fifth Circuit upheld the Phase III rule as it relates to new oil and gas extraction facilities.7 However, the Fifth Circuit granted EPA's request to remand portions of the Phase III rule that addressed electric generators and that established requirements for existing manufacturing facilities on a case-by-case basis using best professional judgment.

On April 20, 2011, EPA issued a proposed rule in response to (i) the Second Circuit's rejection of the restoration provisions in the Phase I rule; (ii) the remand of EPA's Phase II rule; and (iii) the remand of the existing facility portion of the Phase III rule.8 EPA proposed to delete the restoration provisions from the Phase I rule, and in place of the remanded Phase II and III rules, EPA proposed to address existing power plants and existing manufacturing facilities in one rulemaking. The May 19, 2014 final rule covers these same elements but allows more flexible compliance options than did the proposed rule, especially with respect to...